Defense Secretary Chuck Hagel testifies before the House Armed Services Committee on the fiscal year 2014 defense budget request in Washington, D.C., April 11, 2013. Army Gen. Martin E. Dempsey, chairman of the Joint Chiefs of Staff, and Robert F. Hale, the Defense Department's comptroller, also testified. DOD photo by Erin A. Kirk-Cuomo(Click photo for screen-resolution image);high-resolution image available.

Hagel and Army Gen. Martin E. Dempsey, chairman of the Joint Chiefs of Staff, outlined the $526.6 billion fiscal year 2014 defense budget request before the House Armed Services Committee here. The request is part of the fiscal 2014 budget proposal President Barack Obama announced yesterday.

The secretary said the Defense Department’s ability to plan over the long term is compromised by the “considerable uncertainty” brought on by a complex array of security challenges around the world combined with budget ambiguity at home.

Hagel told committee members that “profound budget problems” have resulted from the across-the-board cuts in government spending that began in March under the sequester provision of the Budget Control Act of 2011.

The defense appropriations bill Congress passed in March gives DOD authorities to start new programs and proceed with military construction projects, he noted, but it leaves in place sequestration cuts that could total as much as $41 billion over the next six months. Hagel noted those cuts will “fall heavily on DOD’s operations, maintenance and modernization accounts that we use to train and equip those who will deploy in the future.”

“As a result of all these factors, the department is now facing a shortfall in our operation and maintenance accounts for [fiscal] 2013 of at least $22 billion in our base budget for active forces,” he said.

DOD has in response reduced official travel, cut back on facilities maintenance, imposed hiring freezes, and halted many other important but lower-priority activities, he said, but more needs to be done. Likely next steps include civilian furloughs and even deeper cuts to maintenance and training, he said, “which further erodes the readiness of the force and will be costly to regain in the future.”

If sequester continues, the department will lose roughly $52 billion in fiscal 2014 funding, and a total of $500 billion over the next five years, he said.

“As an alternative, the president’s budget proposes some $150 billion in additional defense savings over the next decade,” Hagel said. “These cuts are part of a balanced package of deficit reduction. Unlike sequester, these cuts are largely back-loaded -- occurring mainly in the years beyond [fiscal] 2018 -- which gives the department time to plan and implement the reductions wisely, and responsibly, anchored by the president’s defense strategic guidance.”

The fiscal 2014 defense spending request balances “the compelling demands of supporting troops still very much at war in Afghanistan, protecting readiness, modernizing the military’s aging weapons inventory in keeping with the president’s strategic guidance, and sustaining the quality of the all-volunteer force,” Hagel said.

He noted 32 percent of the total 2014 requested base budget, or just over $170 billion, will go to pay and benefits; 34 percent, or just over $180 billion, will go to operating costs, including civilian pay; and 33 percent, or $176.3 billion, will be divided among acquisitions and other investments including research, development, testing and evaluation.

“Many of the reductions we are being forced to make in [fiscal] 2013 as a result of sequester run counter to these goals,” the secretary acknowledged.

The fiscal 2014 request seeks to reduce costs by shedding excess infrastructure, Hagel said, noting the Pentagon has asked Congress to initiate a round of base realignment and closure to begin in 2015, though Congress rejected a similar request last year.

“BRAC is a comprehensive and fair tool that allows communities a role in re-use decisions for the property and provides redevelopment assistance,” Hagel said. Though BRAC is an imperfect process that requires up-front costs, he added, “in the long term, there are significant savings. The previous five rounds of BRAC are saving $12 billion annually.”

The secretary said DOD also is seeking other savings in support costs by reviewing underused military hospitals and clinics.

“By the end of the year, we will have a plan in place that suggests how to reduce that underutilization while still providing high-quality medical care. … This restructuring, coupled with a BRAC round and other changes, would permit us to plan on a cut in our civilian workforce that will comply with congressional direction,” he said.

Along with a requested 1 percent pay raise for military members, Hagel said, the Pentagon’s fiscal 2014 request seeks to contain health care costs, particularly among working-age military retirees using the TRICARE military health plan.

“Survivors of military members who died on active duty or medically retired members would be excluded from all TRICARE increases,” the secretary said. “Even after the proposed changes in fees, TRICARE will remain, still, a substantial benefit.”

The Joint Chiefs of Staff and senior enlisted leaders support the request and understand, the secretary said, “that in order to sustain these important benefits over the long term without dramatically reducing the size or readiness of the force, these rising costs need to be brought under control.”

Hagel noted the fiscal 2014 request includes $8.2 billion in savings from weapons program terminations and restructuring, and calls for tightening contract terms and reducing risk in large acquisition programs such as the F-35 joint strike fighter.

The secretary said as sequester proceeds, Deputy Defense Secretary Ash Carter and Dempsey are leading a comprehensive review of the department’s processes with a view toward possible institutional changes. The review is set to finish by the end of May, and results will inform the Quadrennial Defense Review due to Congress in February, Hagel said.

“It is already clear to me that achieving significant additional budget savings without unacceptable risk to national security will require not just tweaking or chipping away at existing structures and practices but, if necessary, fashioning entirely new ones that better reflect 21st-century realities,” he added. “And that will require the partnership of Congress.”

The executive and legislative branches of government share responsibility for protecting national security and America’s strategic interests, Hagel said. Doing so requires “that we make every decision on the basis of enduring national interests and make sure every policy is worthy of the service and sacrifice of our service members and their families,” he added.